Intel May Turn Over Its Web TV Project to Verizon

Intel’s efforts to break into the TV business may be coming to a close.

Sources said the chipmaker is close to a deal to hand over control of Intel Media, the unit that has been trying to build a Web-based subscription TV service, to Verizon, the telco that already operates a pay TV service.

People familiar with the talks said the two companies are in advanced negotiations. But it’s unclear whether Verizon would take control of the entire Intel Media unit, or if Intel would retain a piece of the Web TV project or a say in its operations.

Intel and Verizon reps declined to comment.

If Intel does end up getting out of TV, it will mark the end of an odd chapter in the company’s history. In January 2011, Intel hired Erik Huggers, the executive who had headed up Web video for the BBC, and Huggers began working on a plan to create an Intel-branded pay TV service, using an Intel-built set-top box.

That was a big departure for a company that doesn’t have a media background or sell anything directly to consumers. And lots of tech companies that do deal with media and consumers, from Apple to Google to Sony, have considered pay TV over the Web, but have yet to figure it out.

Huggers eventually hired a team of 300 workers, built the box and created branding for the service, which was supposed to be called “OnCue.” Thousands of Intel employees have been testing the service in their homes this year.

But, if Intel seemed like an odd place for a Web TV project, Verizon makes plenty of sense, at least on paper: It has relationships and reach that Intel never had. Verizon already serves up conventional pay TV to more than five million subscribers via its FiOS unit, and sells broadband access to nearly six million subscribers.

Verizon has also shown an interest in selling video products beyond the 13-state “footprint” it already services via FiOS. Redbox Instant, the Web-plus-DVD movie-rental service that launched earlier this year, is supposed to be a national play.

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